Becton Fails To Calm Shareholders

The Age

Tuesday October 28, 2008

NATALIE CRAIG, PROPERTY REPORTER

MELBOURNE developer Becton struggled to allay investors' fears at a packed annual meeting, refusing to comment on the possibility of an unfavourable takeover and admitting it had come close to breaching loan covenants.

Chairman Brian Pollock told about 100 shareholders that the company would probably stay in a trading halt during talks with hopeful buyers. But he refused to elaborate on what parts of the company would be sold and what kind of deal would be considered.

Three companies, including US private equity group BlackRock, are rumoured to be interested in buying Becton, whose shares have fallen from more than $5 to 15 in a year.

Chief executive Matthew Chun said the company's share price had been hit most recently by institutional investors selling up to buy into the capital-raising of rival property company GPT.

Net tangible assets had increased since June 30, from $280 million to $297 million, and the company had reduced debt by $275 million. Mr Chun said gearing was lower than the 40.5% reported on June 30, but would not give a specific figure.

However, Becton funds management boss James Goodwin was wary about the company's retail fund breaching its loan rules as values continue to slump. The covenant kicks in with a loan-to-value ratio of 65%. The fund is now at 62%.

"There will be further revaluations in December ... we believe (the loan) should be OK for that quarter," Mr Goodwin said. "Through March, it's difficult to know where revaluations will be."

Mr Chun said eight assets worth about $50 million had been sold at profit to improve the condition of the retail fund.

He said the residential market would remain strong and the company did not have to discount any of its apartments.

It would attempt to renew lease deals with commercial tenants faster to try to cement property values.

© 2008 The Age

Back to News Index | Back to Home